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Don't get burned up over CVS tobacco decision

Lebanon Daily News

Updated:
02/10/2014 02:46:36 PM EST

CVS Caremark raised eyebrows last week when officials announced that it would discontinue tobacco sales in its 7,600 stores.

It's not particularly surprising that a provider of health-care products would decide to stop selling items that are decidedly unhealthy. The surprising part is the projected $2 billion in losses the company is expected to absorb, at least in the short term, from the discontinuation.

It is an unusual move for a corporation, many of whom seem blinded to everything except the next quarter's income numbers and the dividends expected for stockholders, to engage in something like big-picture planning.

There is money that will be sacrificed in the short term, but an article from Forbes by Celia Brown, here, http://onforb.es/1bjPGMo, makes a strong argument that the decision positions CVS well in America's future health-care landscape.

The Forbes piece argues that pharmacy retailers like CVS will compete more and more with segments of the health-care field with whom they were previously partners — like doctors' offices and laboratories.

Regarding factors in America's new health-care playing field, Brown wrote, "One is the Affordable Care Act, under which 14 million Americans are expected to gain health insurance for the first time. That will overwhelm the physician population, and a predicted 7 million patients will face a physician shortage, according to Deloitte."

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It is expected that businesses like neighborhood pharmacies could provide clinical services — walk-in basic diagnoses with prescriptions on-site — to ease the doctor shortage and gain market share in the post-ACA world. In fact, CVS has been offering "MinuteClinics" since 2000, so the business model that could become the wave of the future is already in place.

And the writer doesn't believe this will be the only significant change to be seen in the coming years.

CVS, as a private business, is free to decide what products it will provide to customers. It should not be forced to carry tobacco any more than it should be forced to sell cocktail dresses.

The market for tobacco products has been dwindling for decades, though it is still robust. But had this still been the 1950s, with half or more of the American population lighting up, this move could have been corporate suicide. These are not those days.

There was criticism in some circles that the corporation should not have trumpeted its stance that the move was for health reasons. After all, the stores sell a variety of products that don't seem to fit in with a healthy lifestyle: Junk food was one that was cited repeatedly.

We believe company officials see cutting tobacco sales as more in keeping with the core mission of their operation. But we're cynical enough to recognize that it's a move that won't ruffle too many consumers' feathers and has a potential significant business up-side. That's what allowed it to be made.

Smokers will still smoke; they just won't be getting their cigarettes from CVS come this fall. As to the brave new ACA world, that is something for which CVS, and the rest of us, are preparing.

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